The Australian Competition and Consumer Commission (ACCC) has rejected the proposed acquisition of Karabar Supermarket by Woolworths.

ACCC chairman Graeme Samuel said that the acquisition of the supermarket [located in Queanbeyan, NSW] would be likely to substantially lessen competition in the local retail market surrounding the store.

"The ACCC had strong evidence to suggest that in the absence of the acquisition by Woolworths, the supermarket would instead be acquired by an independent operator, Supabarn, which has intentions to expand the supermarket to operate as a full-line supermarket in strong competition with Woolworths and other supermarket operators,” explains Samuel.

“The ACCC found that Supabarn supermarkets offer a different proposition to existing operators in the local market and considered that this would lead to increased consumer choice, as well as competition between supermarket operators on a number of factors including price, range, service, and product quality and freshness.”

The ACCC also noted that if the acquisition had proceeded, Woolworths would have owned three of the four full-line supermarkets in the Queanbeyan area, or three out of five if the smaller Aldi supermarket is also included.